Electronic payments are faster, less expensive, more secure, and more efficient than check-based payments. For example, the direct deposit arrangement between employers and banks provides a fast and secure electronic alternative to traditional paper paychecks for the payment of employees. Under the direct deposit arrangement, an employee's paycheck is electronically deposited from the employer's account to the employee's account, thus saving time and expense while providing a transaction that is convenient for the employer and the employee.
Employers may fulfill payment obligations on behalf of their employees by collecting funds, such as taxes or child support payments, and remitting the funds to appropriate recipients. In the case of tax payments, the recipient may be, for example, a federal or state entity. In the case of child support payments, the recipient may be, for example, an intermediary such as a state agency charged with distributing child support payments. Often, the recipient may differ from employee to employee. For example, an employer, such as a national corporation, may collect child support payments from employees that reside and owe child support in different states. The employer must therefore process payments for many different recipients, a confusing and time-consuming process.
To ease the submission of payments collected by an employer, there is a need for a system to collect and process payments from multiple employees for multiple recipients in an electronic manner. However, many obstacles prohibit electronic payment processing on a state or national basis. First, a single employer may collect payments, such as child support payments, for recipients in several different states. Second, in the context of child support payments, each state may have different rules that govern the information employers must provide with payments. State agencies that oversee the payment process require processing information that may differ from state to state. Third, electronic payment processing requires new technology. Many employers are unable to afford purchasing or developing new technology for electronic payment processing.
Despite these obstacles, there is a need for an electronic payment processing system that accommodates the requirements of multiple employees for multiple recipients and that does not require an investment in new technology and/or equipment. Furthermore, there is a need for an electronic payment system whereby the employer may initiate transactions over a network, such as the Internet, with a single processing entity rather than submitting payments directly to multiple recipients.